Crude oil prices plunged on Wednesday, mirroring the broader slump in global financial markets, as new country-specific tariffs imposed by U.S. President Donald Trump came into effect.
The tariffs included a massive 104% levy on Chinese imports, with U.S. customs authorities set to begin imposing new tariffs on imports from 86 countries starting at midnight. (Source: Reuters)
The S&P 500 index hovered near bear market territory, weighed down by the steepest sell-off since the onset of the pandemic in 2020.
These developments have sparked growing concerns that the intensifying tariff war between the U.S. and China—the world’s two largest economies—could dampen global economic growth and reduce demand for oil.
The combination of escalating trade tensions and OPEC+’s decision to restore more oil barrels to the market has created a “toxic cocktail” of recession fears, pushing Brent crude to retest the critical $60/b level for the first time since March 2021.
Meanwhile, U.S.-based WTI crude also saw a sharp decline, dropping as low as $56/b, its lowest level since February 2021, amid rising geopolitical and trade uncertainties.
The underperformance of oil prices, particularly for growth-sensitive crude, was largely driven by recession worries fueled by the tariff escalation. Both Brent and WTI have now fallen more than 15% since last Wednesday, when Trump announced the new import duties.
In addition to the tariff concerns, the decision by OPEC+ to increase output by 411,000 barrels per day starting in May added further downward pressure, exacerbating fears of an oversupplied global oil market.
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